Cuban President Raul Castro said the country's economy contracted 0.9% in 2016 despite recording growth of 1% in the first half of the year, Reuters reported.
"Financial tensions and challenges that might intensify again in certain circumstances will persist, but we hope that gross domestic product will grow moderately, by around 2% [in 2017]," Castro was quoted as saying.
Cuba's economy shrank in the second half of 2016 as the government reduced imports, fuel and investment due to the decrease in cheap oil deliveries from key trading partner Venezuela.
The country has recorded an average growth of close to 3% each year between 2011 and 2015 due to market-friendly reforms and the easing of its relationship with the U.S., however, the success of Donald Trump in the U.S. presidential elections could hamper growth, as he has threatened to "terminate" relations with Cuba.
Castro stressed the need to attract foreign investment, saying the country is "not going toward capitalism, but we cannot be afraid of, or put obstacles in the way of, that which we can do within our laws."
The president added that the country needs to shed its prejudices toward foreign investment.
Cuba's fiscal deficit is expected to reach 12% of GDP, the report noted.